A new general fund revenue report is out from the Office of Management and Budget.
First, some good news. Oil tax revenues exceeded expectations in May. “Actual revenue numbers just released by the Tax Department show May oil tax revenues exceeding estimates by $23.3 million. Oil tax revenue collections from February through April 2016 also exceeded estimates by $10.5 million,” the OMB reports. “The increase in actual revenues can be attributed to average oil production remaining above 1.1 million barrels per day and West Texas Intermediate (WTI) prices rebounding from the $20’s in February to $48 per barrel today. North Dakota’s price per barrel increased from an average of $22 in February to almost $30 in March.”
The bad news is that the state’s revenues continue to be ugly. The state is down over $264 million in general fund revenues from last biennium, and revenues have missed the original forecast used by lawmakers to budget by over $449 million.
Even the updated revenue forecast issued by the OMB in January has proven a bit too rosy. Revenues are $53 million (or 2.3 percent) less than even that most recent prediction.
You can read the full report below. Here are some graphs to provide some context. First, this is cumulative general fund revenues for each month of the biennium compared to the previous four bienniums.
As you can see the current biennium is way down, to date, compared to the previously biennium. But we’re still not anywhere close to falling down to pre-oil boom levels.
In terms of getting a handle on where post-oil boom revenues are going to be, it’s clear that the January forecast is proving to be a lot more accurate than the May 2015 forecast used by lawmakers to budget. But the widening gap between the lines in the graph shows that it is still proving to be a bit too optimistic:
In April the January forecast was off by 2.3 percent.
In March that same forecast was off by 1 percent.
In February the forecast was off by 0.3 percent.
I think everyone is hoping that gap between forecast and reality doesn’t get any bigger, because every percentage point it grows means a larger dollar figure which has to be made up through either spending cuts or revenue increases.
But, again, context. While general fund revenues are down more than 14 percent from the last biennium, they’re still up 75 percent from the last pre-oil boom biennium.
In politics spending increases are always easy, while spending reductions are met with sturm und drang. But even if this trend in falling revenues continues the state will still likely end this biennium next year still way, way ahead of pre-oil boom levels of revenue.
Here’s the full report:
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